Okabee Enterprises is the distributor for two products, Model A100 and Model B900. Monthly sales and the contribution margin ratios for the two products follow: Product Model A100 Model B900 Total Sales . . . . . . . . . . . . . . . . . . . . . . . . $700,000 $300,000 $1,000,000 Contribution margin ratio . . . . . . . . . 60% 70% ? The company’s fixed expenses total $598,500 per month. Required: 1. Prepare a contribution format income statement for the company as a whole. 2. Compute the break-even point for the company based on the current sales mix. 3. If sales increase by $50,000 per month, by how much would you expect net operating income to increase? What are your assumptions?
Okabee Enterprises is the distributor for two products, Model A100 and Model B900. Monthly sales and the contribution margin ratios for the two products follow:
Product
Model A100 Model B900 Total
Sales . . . . . . . . . . . . . . . . . . . . . . . . $700,000 $300,000 $1,000,000
Contribution margin ratio . . . . . . . . . 60% 70% ?
The company’s fixed expenses total $598,500 per month.
Required:
1. Prepare a contribution format income statement for the company as a whole.
2. Compute the break-even point for the company based on the current sales mix.
3. If sales increase by $50,000 per month, by how much would you expect net operating income to increase? What are your assumptions?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
